OVERVIEW

This Form 10-Q contains forward-looking statements that involve risks and uncertainties. We use words such as "anticipate", "believe", "plan", "expect", "future", "intend" and similar expressions to identify forward-looking statements. These statements appear throughout the Form 10-Q and are statements regarding our intent, belief, or current expectations, primarily with respect to our operations and related industry developments. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Form 10-Q. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us and described in Part I, Item 1A, entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008, and elsewhere in this Form 10-Q.

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

Geron is a Menlo Park, California-based biopharmaceutical company developing first-in-class therapeutic products for the treatment of cancer and chronic degenerative diseases, including spinal cord injury, heart failure and diabetes. The company is advancing an anti-cancer drug and a cancer vaccine that target the enzyme telomerase through multiple clinical trials. Geron is also believed to be the world leader in the development of human embryonic stem cell (hESC)-based therapeutics. The company has received clearance from the Food and Drug Administration (FDA) to begin the world's first human clinical trial of a hESC-based therapy: GRNOPC1 for acute spinal cord injury.

Our results of operations have fluctuated from period to period and may continue to fluctuate in the future, as well as the progress of our research and development efforts and variations in the level of expenses related to developmental efforts during any given period. Results of operations for any period may be unrelated to results of operations for any other period. In addition, historical results should not be viewed as indicative of future operating results. We are subject to risks common to companies in our industry and at our stage of development, including risks inherent in our research and development efforts, reliance upon our collaborative partners, enforcement of our patent and proprietary rights, need for future capital, potential competition and uncertainty of clinical trial results or regulatory approvals or clearances. In order for a product to be commercialized based on our research, we and our collaborators must conduct preclinical tests and clinical trials, demonstrate the efficacy and safety of our product candidates, obtain regulatory approvals or clearances and enter into manufacturing, distribution and marketing arrangements, as well as obtain market acceptance. We do not expect to receive revenues or royalties based on therapeutic products for a period of years, if at all.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We believe that there have been no significant changes in our critical accounting policies and estimates during the three months ended March 31, 2009 as compared to the critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2008 as filed with the Securities and Exchange Commission on February 27, 2009.

Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Note 1 of Notes to Condensed Consolidated Financial Statements describes the significant accounting policies used in the preparation of the condensed consolidated financial statements.

Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the condensed consolidated financial statements as soon as they became known. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our condensed consolidated financial statements are fairly stated in accordance with accounting principles generally accepted in the United States, and present a meaningful presentation of our financial condition and results of operations.

Revenues

We recognized no revenues from collaborative agreements for the three months ended March 31, 2009, compared to $79,000 for the comparable 2008 period. Revenues for 2008 primarily reflected related party reimbursements we received from our joint venture in Hong Kong, TA Therapeutics, Ltd. (TAT), for scientific research services and revenue recognized under our collaboration with Corning Life Sciences. Since June 16, 2007, we have been consolidating TAT's results of operations and have eliminated any related party revenue when the source of funds has been derived from our contributions to the related party.

We have entered into license and option agreements with companies involved in oncology, diagnostics, research tools, agriculture and biologics production. In each of these agreements, we have granted certain rights to our technologies. In connection with the agreements, we are entitled to receive license fees, option fees, milestone payments and royalties on future sales, or any combination thereof. We recognized license fee revenues of $380,000 for the three months ended March 31, 2009, compared to $1.6 million for the comparable 2008 period related to our various agreements. In 2008, license fee revenues included recognition of a $1.5 million milestone payment in connection with our joint venture agreement with Exeter Life Sciences, Inc. as a result of the final Risk Assessment released by the U.S. Food and Drug Administration addressing food products made from cloned animals or their progeny. Current revenues may not be predictive of future revenues.

We received royalties of $64,000 for the three months ended March 31, 2009, compared to $33,000 for the comparable 2008 period on product sales of telomerase detection and telomere measurement kits to the research-use-only market, cell-based research products and agricultural products. License and royalty revenues are dependent upon additional agreements being signed and future product sales.

Research and Development Expenses

Research and development expenses were $13.8 million for the three months ended March 31, 2009, compared to $13.6 million for the comparable 2008 period. The increase in research and development expenses for the 2009 first quarter compared to the 2008 first quarter is primarily the net result of increased clinical trial costs of $427,000 as a result of increased patient enrollment for GRN163L and GRNVAC1 trials and start-up costs for the GRNOPC1 trial, offset by reduced sponsored research of $222,000. Overall, we expect research and development expenses to increase in the next year as we incur expenses related to clinical trials for GRN163L, GRNVAC1 and GRNOPC1 along with continued development of our human embryonic stem cell (hESC) programs.

Our research and development activities have arisen from our two major technology platforms, telomerase and hESCs. The oncology programs focus on treating or diagnosing cancer by targeting or detecting the presence of telomerase, either inhibiting activity of the telomerase enzyme, diagnosing cancer by detecting the presence of telomerase, or using telomerase as a target for therapeutic vaccines. Our core knowledge base in telomerase and telomere biology supports all these approaches, and our scientists may contribute to any or all of these programs in a given period. We have initiated the following clinical trials of GRN163L:

º Phase I single agent trial in patients with chronic lymphoproliferative diseases;

º Phase I single agent trial in patients with solid tumor malignancies;

º Phase I trial in patients with advanced non-small cell lung cancer when administered intravenously in combination with a standard paclitaxel/carboplatin regimen;

º Phase I single agent trial in patients with multiple myeloma;

º Phase I/II trial in patients with breast cancer when administered intravenously in combination with a paclitaxel/bevacizumab regimen; and

º Phase I trial in patients with multiple myeloma when administered intravenously in combination with bortezomib with and without dexamethasone.

Preliminary data from these studies showed safety and tolerability of the drug in low-dose cohorts as well as the expected pharmacokinetic properties after multiple intravenous infusions of the drug. Interim data from the ongoing clinical trial of GRN163L in two patients with relapsed and refractory multiple myeloma showed the first evidence in humans of telomerase inhibition by a telomerase targeting drug. These preliminary results will help optimize dosing schedules to enable sustained telomerase inhibition that hopefully will translate into clinical activity.

Our hESC therapy programs focus on treating injuries and degenerative diseases with cell therapies based on cells derived from hESCs. A core of knowledge of hESC biology, as well as a significant continuing effort in deriving, growing, maintaining, and differentiating hESCs, underlies all aspects of this group of programs. Many of our researchers are allocated to more than one hESC program, and the percentage allocations of time change as the resource needs of individual programs vary. In our hESC therapy programs, we have concentrated our resources on several specific cell types, including:

º GRNOPC1, hESC-derived oligodendrocyte progenitor cells, for the treatment of acute spinal cord injury;

º GRNCM1, hESC-derived cardiomyocytes, for the treatment of myocardial disease and toxicology drug testing;

º GRNIC1, hESC-derived pancreatic islet ß cells for the treatment of diabetes;

º hESC-derived osteoblasts for the treatment of osteoporosis;

º hESC-derived chondrocytes for the treatment of osteoarthritis;

º hESC-derived hepatocytes for liver failure and ADME drug testing; and

º hESC-derived dendritic cells for cancer immunotherapy and to prevent immune rejection of the other cell types used in therapeutic applications.

We have developed proprietary methods to grow, maintain, and scale the culture of undifferentiated hESCs that use feeder cell-free and serum-free media with chemically defined components. Moreover, we have developed scalable processes to differentiate these cells into therapeutically relevant cells. We have developed cryopreserved formulations of hESC-derived cells to enable our business model of delivering "on demand" cells for therapeutic use. In January 2009, we received clearance from the FDA to begin a clinical trial of GRNOPC1, our hESC-derived therapy targeted for the treatment of acute spinal cord injury.

Research and development expenses allocated by program are as follows (in thousands):

                 Three Months Ended
                     March 31,
                 2009          2008
                    (Unaudited)
Oncology       $   7,306     $  7,571
hESC Therapies     6,465        6,042
Total          $  13,771     $ 13,613

At this time, we cannot provide reliable estimates of how much time or investment will be necessary to commercialize products from the programs currently in progress. Drug development in the U.S. is a process that includes multiple steps defined by the FDA under applicable statutes, regulations and guidance documents. After the preclinical research process of identifying, selecting and testing in animals a potential pharmaceutical compound, the clinical development process begins with the filing of an IND. Clinical development typically involves three phases of study: Phase I, II and III. The most significant costs associated with clinical development are incurred in Phase III trials, which tend to be the longest and largest studies conducted during the drug development process. After the completion of a successful preclinical and clinical development program, a New Drug Application (NDA) or Biologics License Application (BLA) must be filed with the FDA, which includes, among other things, very large amounts of preclinical and clinical data and results and manufacturing-related information necessary to support requested approval of the product. The NDA/BLA must be reviewed and approved by the FDA.

According to industry statistics, it generally takes 10 to 15 years to research, develop and bring to market a new prescription medicine in the United States. In light of the steps and complexities involved, the successful development of our potential products is highly uncertain. Actual timelines and costs to develop and commercialize a product are subject to enormous variability and are very difficult to predict. In addition, various statutes and regulations also govern or influence the manufacturing, safety reporting, labeling, storage, record keeping and marketing of each product.

For a more complete discussion of the risks and uncertainties associated with completing development of potential products, see the sub-section titled "Delays in the commencement of clinical testing of our current and potential product candidates could result in increased costs to us and delay our ability to generate revenues" and "Obtaining regulatory approvals to market our product candidates in the United States and other countries is a costly and lengthy process and we cannot predict whether or when we will be permitted to commercialize our product candidates" in Part II, Item 1A entitled "Risk Factors" and elsewhere in this quarterly report.

General and Administrative Expenses

General and administrative expenses were $3.4 million for the three months ended March 31, 2009, compared to $4.0 million for the comparable 2008 period. The decrease in general and administrative expenses for the 2009 first quarter compared to the 2008 first quarter was primarily the result of reduced patent legal costs of $180,000 and reduced consulting costs of $140,000. We currently anticipate general and administrative expenses to remain consistent with current levels.

Unrealized Gain (Loss) on Fair Value of Derivatives

Unrealized gain (loss) on fair value derivatives reflects a non-cash adjustment for changes in fair value of warrants and options held by non-employees to purchase common stock that are classified as current liabilities. Under Issue 00-19, derivatives classified as assets or liabilities are marked to fair value at each financial reporting date with any resulting unrealized gain (loss) recorded in the condensed consolidated statements of operations. The derivatives continue to be reported as an asset or liability until such time as the instruments are exercised or expire or are otherwise modified to remove the provisions which require them to be recorded as assets or liabilities, at which time these instruments are marked to fair value and reclassified from assets or liabilities to stockholders' equity. We incurred a net unrealized gain on derivatives of $77,000 for the three months ended March 31, 2009, compared to $406,000 for the comparable 2008 period. The unrealized gain on derivatives for 2009 and 2008 primarily reflects the decreasing value of derivative liabilities currently on the condensed consolidated balance sheet based upon decreasing terms of outstanding instruments and corresponding adjustments in volatility and interest rate assumptions.

Interest and Other Income

Interest income was $525,000 for the three months ended March 31, 2009, compared to $1.9 million for the comparable 2008 period. The decrease in interest income for the 2009 first quarter compared to the 2008 first quarter was primarily due to decreased interest rates. Interest earned in future periods will depend on the size of our securities portfolio and prevailing interest rates.

Losses Recognized Under Equity Method Investment

In August 2008, we exchanged our equity interest in the Start Licensing, Inc. (Start) joint venture for equity interest in ViaGen, Inc. (ViaGen). In September 2008, we provided a loan of $1.5 million to ViaGen in connection with ViaGen acquiring an interest in an unrelated company. The proceeds of the loan did not fund prior ViaGen losses and represents additional financial support to ViaGen. In accordance with the equity method of accounting, we recognized losses of $656,000 for our proportionate share of ViaGen's losses for the three months ended March 31, 2009 as an adjustment to the basis of the loan. Previously, we had suspended the equity method of accounting for Start and ViaGen since our proportionate share of net losses exceeded the value of our investment and we had no commitments to provide financial support to either company.

Interest and other expense was $52,000 for the three months ended March 31, 2009, compared to $24,000 for the comparable 2008 period. The increase in interest and other expense for the 2009 first quarter compared to the 2008 first quarter was primarily due to higher investment management charges.

Net Loss

Net loss was $16.8 million for the three months ended March 31, 2009, compared to $13.7 million for the comparable 2008 period. The increase in net loss for the 2009 first quarter compared to the 2008 first quarter was primarily due to decreased interest income, reduced revenues from milestones and recognition of losses under equity method investments.

LIQUIDITY AND CAPITAL RESOURCES

Cash, restricted cash, cash equivalents and marketable securities at March 31, 2009 were $200.5 million, compared to $163.7 million at December 31, 2008. We have an investment policy to invest these funds in liquid, investment grade securities, such as interest-bearing money market funds, U.S. government and agency securities, corporate notes, commercial paper, asset-backed securities and municipal securities. Our investment portfolio does not contain securities with exposure to sub-prime mortgages, collateralized debt obligations or auction rate securities and we have not to date recognized an other-than-temporary impairment on our marketable securities or any significant changes in aggregate fair value that would impact our cash resources or liquidity. To date, we have not experienced lack of access to our invested cash and cash equivalents; however, we cannot provide assurances that access to our invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets. The increase in cash, restricted cash, cash equivalents and marketable securities in 2009 was primarily due to the receipt of $45.9 million in net proceeds in February 2009 from an underwritten public offering of our common stock.

We estimate that our existing capital resources, interest income and equipment financing facility will be sufficient to fund our current level of operations through at least December 2010. However, our future capital requirements will be substantial. Changes in our research and development plans or other changes affecting our operating expenses or cash balances may result in the expenditure of available resources before such time. Factors that may require us to use our available capital resources sooner than we anticipate include:

º continued clinical development of our product candidates, GRN163L, GRNVAC1 and GRNOPC1;

º our ability to meaningfully reduce manufacturing costs of current product candidates;

º future clinical trial results;

º progress of product and clinical development of our other product candidates, such as GRNCM1, GRNIC1 and GRNVAC2;

º cost and timing of regulatory approvals; and

º filing, maintenance, prosecution, defense and enforcement of patent claims and other intellectual property rights.

If our capital resources are insufficient to meet future capital requirements, we will need to raise additional capital to fund our operations. We intend to seek additional funding through strategic collaborations, public or private equity financings, equipment loans or other financing sources that may be available. However, we may be unable to raise sufficient additional capital when we need it, on favorable terms or at all. If we are unable to obtain adequate funds on reasonable terms, we may be required to curtail operations significantly or obtain funds by entering into financing, supply or collaboration agreements on unattractive terms or we may be required to relinquish rights to technology or product candidates or to grant licenses on terms that are unfavorable to us.

Cash Flows from Operating Activities. Net cash used in operations for the three months ended March 31, 2009 and 2008 was $9.3 million and $12.9 million, respectively. The decrease in net cash used for operations in 2009 was primarily the result of changes to current and noncurrent liabilities.

Cash Flows from Investing Activities. Net cash used in investing activities was $21.1 million for the three months ended March 31, 2009, compared to net cash provided by investing activities of $5.5 million for the comparable 2008 period. The decrease in net cash provided by investing activities reflected increased marketable securities purchases.

Cash Flows from Financing Activities. Net cash provided by financing activities for the three months ended March 31, 2009 was $46.7 million, compared to none for the comparable 2008 period. In February 2009, we completed a public offering of 7.25 million shares of our common stock at a public offering price of $6.60 per share, resulting in net proceeds of approximately $45.9 million after deducting underwriting discounts and commissions and offering expenses.

Contractual Obligations

   As of March 31, 2009 our contractual obligations for the next five years, and
thereafter were as follows:

                                                       Principal Payments Due by Period
                                                      Remainder       2010-        2012-        After
   Contractual Obligations (1)           Total         in 2009         2011         2013         2013
                                                            (Amounts in thousands)
Equipment leases                       $       19     $       13     $      6     $      -     $      -
Operating leases (2)                            -              -            -            -            -
Research funding (3)                        2,236            401          539          524          772
Total contractual cash obligations     $    2,255     $      414     $    545     $    524     $    772


____________________

(1) This table does not include any milestone payments under research collaborations or license agreements as the timing and likelihood of such payments are not known. In addition, this table does not include payments under our severance plan if there were a change in control of the company or severance payments to key employees under involuntary termination.

(2) In March 2008, we issued 742,158 shares of our common stock to the lessor of our premises at 200 and 230 Constitution Drive in payment of our monthly rental obligation from August 1, 2008 through July 31, 2012. In May 2007, we issued 210,569 shares of our common stock to the lessor of our premises at 149 Commonwealth Drive in payment of our monthly rental obligation from May 1, 2007 through April 30, 2010. The fair value of the common stock issuances has been recorded as a prepaid asset and is being amortized to rent expense on a straight-line basis over the lease periods.

(3) Research funding is comprised of sponsored research and license commitments at various laboratories around the world, including commitments of our majority-owned subsidiary, TAT.

Off-Balance Sheet Arrangements

None